Savers have lost an astonishing £22billion as a result of interest rate cuts, it was revealed tonight.

The plunging income from interest on nest eggs has left them the 'innocent victims' of the recession, the Tories said.

They urged ministers to temporarily abolish the starting rate and basic rate of tax on savings income to help raise their returns.

Up to 20 million people, mainly middle-income pensioners and savers, are believed to be losing out.

Tory Treasury spokesman Philip Hammond told MPs that the 'welcome relief' of falling interest rates for homeowners and businesses came at a price because it penalised all those dependent on savings and investments for their income.

And the hardest hit were 'the very people who have behaved responsibly during the Prime Minister's age of irresponsibility,' he said in an emergency Commons debate.

'Now they are seeing their savings income slashed and their plans destroyed.'

Many savings accounts now paid less than one per cent, with some even offering zero per cent where there is less than £1,000 deposited.

'Those people now feel betrayed - confused that they should be punished, bewildered that those who have saved thriftily should have to pay the price for a crisis created by those who have borrowed and lent profligately,' Mr Hammond said.

'They are the innocent victims of Labour's recession.'

Scrapping the basic and lower rates of tax on savings would mean anyone earning less than £32,000 a year with savings income would pay no tax.

The Tories have also proposed to raise tax allowances for all over-65s by £2,000, saving them up to £400 a year.